Payment Methods Procedures at Head Office – Military Commercial Joint Stock Bank

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Letter of Credit (L/C) payment is the most widely used payment method, accounting for about 70% of payment value globally. L/C related services provided by MB include: UPAS L/C, Irrevocable L/C, L/C

Confirmation, Sight L/C, Deferred L/C, Acceptance L/C, Red Clause L/C, Revolving L/C, Transferable L/C, Back-to-Back L/C, Standby L/C, Counter L/C.

2.2.2. Procedures for payment methods at Head Office - Military Commercial Joint Stock Bank

a. International money transfer method

Incoming international money transfer process

Diagram 2.2. Incoming international money transfer process at Military Commercial Joint Stock Bank - Head Office

The performer

Diagram
SWIFT Specialist
Money Transfer Specialist
Authority
Money Transfer Specialist

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(Source: Money Transfer Business Process – Operations Block)

Incoming international money transfers are mainly processed through two departments: SWIFT and reconciliation department and International Money Transfer department.

Step 1: Receive and check transaction electricity

SWIFT and Reconciliation Department: This is the focal point for receiving and generating SWIFT messages related to international transactions: providing messages related to incoming international transactions and accompanying lists to the International Transaction Department. Transaction messages must normally be sent before the cut-off-time so that specialists can process them during the day. After receiving incoming international orders from the SWIFT and Reconciliation Department, check the order conditions, including: creating a list of messages, printing transaction messages, counting the number of messages to see if the printed transaction messages match the list of messages created, comparing information and merging forwarding messages (if necessary).

Step 2: Transaction accounting

The Remittance Specialist will run the electricity distribution program on T24 for the system to automatically distribute the accounting electricity to the appropriate accounting queues and to the corresponding branch environment that needs to be reported (based on the customer's account number). There are 3 accounting application queues on T24: automatic credit electricity, manual credit electricity and current credit electricity. Remittance specialists will choose the corresponding queue to account for credit.

Step 3: Review transaction

After accounting, the remittance specialist submits it to the competent authority (controllers or department heads or block directors) for signature and approval. If the competent authority approves and agrees with the accounting entry, the remittance order will be approved on t24, and the remittance specialist will receive the file back for storage. In the opposite case, if the competent authority discovers an error or suspicion, the remittance order will be returned to the remittance specialist to check the cause. The remittance specialist will then contact the Bank that issued the remittance order to check for errors and suspend the remittance order for later resolution.

Step 4: Save the file

When the transaction is completed, the money transfer specialists at the headquarters are responsible for printing the daily transaction list that has been accounted for and attached to the money transfer to the origin for marking, controlling and storing accounting documents according to the regulations on MB's accounting document regime.

Step 5: Claim and pay relevant fees

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When recording the credit amount for the customer and collecting the fee, the international money transfer specialist will send a credit telegram to make a fee claim to the bank that sent the money transfer to MB to claim the fees that the beneficiary has deducted, including: credit fee, telegram fee, foreign bank fee (if any), and verification fee (if any). After receiving the credit telegram from the payment agent bank, the transfer specialist will

International money accounts to return to customers the amount of fees previously collected.

Step 6: Handling errors (if any)

In case of errors in incoming money transfer orders, they will be retained for later processing. The international money transfer specialist will verify and monitor the verification of erroneous orders. The specialist must record the amount to be verified into the payable account, reprint the document and create a wire to send to the foreign bank, and enter it into the tracking table.

Outbound international money transfer process

Diagram 2.3. Outward international money transfer process at Military Commercial Joint Stock Bank

– Head office

The performer

Diagram

Money Transfer Specialist

Authority

Money Transfer Specialist

(Source: Money Transfer Business Process – Operations Block)

Step 1: Receive and check documents

International money transfer specialists use the access code with the coordination function to receive electronic documents from the branch. Coordinate the documents to other specialists in the department according to the VIP, regular or VVIP transaction flow. After receiving the electronic documents, the specialists are responsible for printing the documents into hard copies and checking the information on the money transfer order and the money transfer request.

Step 2: Capital report

The International Money Transfer Specialist accesses the capital reporting software (Treasury), enters the capital report with full information about the capital corresponding to each type of Nostro. After processing, the International Money Transfer Specialist responds to the file status and reports the capital to the branch for timely processing. If the file does not meet the standards, the branch must supplement the file for processing and will send it directly to the specialist without going through the coordinator. In case the branch does not supplement the file, the transaction is considered suspended within the prescribed time and the Money Transfer Specialist must notify the Controller.

Step 3: Set up and account

The International Money Transfer Specialist creates MT103 (on T24 or SWIFT) and records it on the T24 system. After creating and recording, the International Money Transfer Specialist must print and record the unapproved form for the Controller or department head to approve the file.

Step 4: Browse the profile

The competent authority approves the file, sends MT103 and accounts on T24. Then, the competent authority exports the approved list of electricity from T24 and creates an outgoing list and transfers it to the Reconciliation and SWIFT department to re-check the list between the hard copy and soft copy for electricity generation.

Step 5: Complete the transaction

If the authority approves the outgoing wire, the international money transfer specialist notifies the branch by phone or internal email to inform the transaction status, then the branch prints the debit note for the customer. In the opposite case, when the wire transfer is not approved, the specialist reviews and re-creates the MT103 wire (if necessary) and accounts according to the authority's request.

b. P

documentary credit

Export documentary credit implementation process

Figure 2.4. Export documentary credit business process at Military Commercial Joint Stock Bank

(Source: Documentary credit business process - Operational Block) Step 1: Receive L/C or modify L/C

The bank accepts L/C notification and L/C amendment notification for customers under the following conditions: receiving authenticated L/C from the Head Office or receiving authenticated L/C with L/C notification from other domestic banks.

Step 2: Check authenticity

The specialist enters the L/C number, the program will automatically update the data on the L/C or L/C amendment notice. The payer checks the content of the notice and adds the necessary information to the program. Then, the entire notice and documents are transferred to the controller. The controller checks the content of the L/C or amendment against the L/C notice or L/C amendment notice just created by the payer.

Step 3: Negotiate and send documents to claim money

Upon receipt of the customer's documents, the payer must request the customer to present the original L/C and the originals of the relevant amendments that have been authenticated.

If the documents are perfect, in case the L/C allows for electronic payment, the specialist will prepare a list of documents with a refund instruction and create a payment request on MT724 and send it to the paying bank. And after the draft is checked by the department head or authorized person, the specialist will calculate the secret code for the telegram. Finally, the specialist will

The staff will package the documents with the Covering letter and send them to the receiving bank via express delivery service. In case of claiming money by mail, the bank will prepare a claim letter and send it with the set of documents to the foreign bank via express delivery service.

If the documents contain errors, the bank must notify the customer to supplement or amend the documents if possible. If the errors cannot be corrected, the bank can call the foreign bank about the errors to ask for acceptance or switch to collection, or still send the documents abroad if the customer requests, on the condition that the customer must bear all the risks.

Step 4: Payment/acceptance of L/C payment

- L/C payment: The controller prints the telegram with MT910/ MT202/ MT103 on export L/C payment and sends it to the specialist. Then, the specialist collects the debt (if the bank sponsors) or notifies the customer, collects the service fee, document sending fee, VAT and sends all documents to the controller. The controller checks the content of the telegram and the accounting documents. If they match, they approve them on paper documents and electronic documents. Finally, the documents are sent back to the specialist for processing.

- Receive payment acceptance message: Upon receiving payment acceptance message MT799/ MT999 from the issuing bank/ confirming bank (for deferred payment L/C), the specialist prepares a notice to accept payment of the bill of exchange presented under the export L/C.

Step 5: Close the file and keep the L/C documents

To close the L/C export document tracking file, the specialist must use a computer program, clearly stating the reason for closing the file because the document has been paid, or has been refused payment, transferred to another form of payment or the document has been returned. All original L/Cs, amendments, checks, copies of documents, payment telegrams, and payment acceptances must be kept according to regulations.

Procedure for implementing import documentary credit

Figure 2.5. Import document credit process at Military Commercial Joint Stock Bank

(Source: Documentary credit business process - Operations Department) Step 1: Open L/C

The Specialist will receive the L/C opening application from the customer along with the documents required by MB. After reviewing the application, the Specialist will decide to open the L/C or reject the customer after 1 working day.

Step 2: Edit L/C

The L/C opened by MB will be sent to the exporter. In case the importer and exporter need to modify some or all of the terms in the original L/C, the importer will request MB to modify the L/C according to his/her wishes.

Step 3: Guarantee of receipt of goods (if any)

In cases where the goods have arrived at the importing country, but the documents have not yet arrived, the customer can request MB to issue a goods receipt guarantee to have the opportunity to receive the goods as soon as possible. To implement the guarantee, the customer must have sufficient funds to pay and commit to pay regardless of whether the documents sent by the exporter are in accordance with the L/C requirements or not.

Step 4: Receive documents and payment

As the issuing bank in this transaction, MB will receive documents from the exporter or the issuing bank. If the set of documents presented is in accordance with the requirements of the L/C, MB will proceed to pay for the set of documents or accept payment within 5 working days. In case the set of documents sent is not in accordance with the requirements of the L/C, MB will

Contact the exporter and the issuing bank to correct the documents and collect the correction fee or refuse payment.

Step 5: Closing the L/C

After completing the above business process, the specialist will close the L/C book and save the documents according to MB's regulations.

c. Collection method

Payment process thanks to import revenue

Figure 2.6. Payment process thanks to import revenue

(Source: Collection process – Payment service – Operations Division)

Step 1: Receive and check collection documents

The specialist is responsible for checking the collection order of the sending bank and following the instructions of the collection order and the collection information. Checking and comparing the quantity of documents received with the list of documents of the sending bank. Although the receiving bank is not responsible for checking the content of any type of document, in the case of bills of lading, the bank must check the preparation and endorsement of the bill of lading.

Step 2: Notification and collection processing

Within 2 working days, the specialist must check the documents and collection order. If the information is correct and complete, prepare a collection notice to send to the customer as instructed in the collection order and prepare a copy to collect the notice fee.

- For D/P collection documents: Only deliver documents when the customer has paid the full payment amount and related costs.

- For D/A collection documents: The bank only delivers documents upon receiving the customer's acceptance of collection payment along with collection service fees according to MB's current fee schedule. Acceptance procedures are carried out in accordance with international practices.

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